“Free education in our lifetime” is the campaign slogan many students have adopted in the recent protests across South Africa against university fee increases. The country’s higher education minister is among those who have replied that, although free education for all university students would be the ideal, it is economically unfeasible right now.
But is it true that in an ideal world higher education would be free – that is, be fully funded by the state? More to the point, would higher education be free in a just society?
Taxes shouldn’t fund an elite few
Proponents of free university tuition are right to point out that higher education is a public good. Having well-trained doctors, lawyers, teachers, accountants, managers, engineers, journalists and civil servants around benefits us all. And the critical reasoning skills cultivated by humanities subjects like economics, African studies, classics, political studies and philosophy enhance civil society’s ability to hold government to account.
But it would be naïve to think that school leavers are flocking to the groves of academe in ever increasing numbers out of a sense of civic duty. Higher education is not just a public good. It is also an individual good for those who pursue it.
For one thing, many students find their subject intrinsically interesting and rewarding. At its best higher education is a mind-expanding experience. Just as importantly, once they have successfully completed their degree and entered the job market, graduates have an enormous competitive advantage over those who have no letters after their name. A good university degree can open the way to high-status, high-income job opportunities.
But while everyone pays tax of one kind or another, far fewer than half of South Africans will receive a university education. Currently less than 15% of those over the age of 20 have received a university education - though fortunately that figure is set to rise. Surely it is not fair that the intrinsic rewards and competitive advantage conferred by higher education should be fully funded by taxpayers when only a minority enjoy them.
There are far stronger arguments for making high school education or health care free at the point of use. Everyone can expect to need health care, and almost 100% of South Africans receive some high school education.
So the principal objection to free university tuition is not that it is unfeasible, but rather that it would be unjust. It would be a form of exploitation of the masses of the people by a degree-toting élite. Those of us who embrace the goals of equality and social justice must be far less coy about pointing this out.
Exploring the options
I’ve argued that its status as an individual good means higher education should not be fully funded by the state. Equally, its status as a public good means it should not be fully funded by student fees. To the extent that higher education is an individual good, the individuals who benefit from it should pay for it; to the extent that it is a public good, it should be paid for from the public purse.
One can argue about what the exact ratio ought to be, but a 50:50 split between public funding and student fees is an obvious benchmark to begin from.
The recent fee protests have starkly reminded us that many students and school leavers simply cannot afford university fees at their current levels. It would be irresponsible to play down the troubling predicament in which many poorer students find themselves. However, this is not a problem with the current funding model (who pays, and how much). Instead it is a huge problem with the current payment system (how they pay it, and when).
Could full fee payment at the beginning of, or during, a degree be the answer? No. It is evident that making all students pay up front for university tuition would be unfair. This system would tend to exclude talented young people from poorer backgrounds. It would also lead to inefficiency, as society would not benefit from the contribution which its gifted, but less economically advantaged, young people could have made.
What about low-interest government loans to students? These potentially come with problems. The risk of defaulting on a large loan years down the line is one which a poorer student, or their family, will rationally wish to avoid. And loans most certainly do not remedy the unfairness when they are too small. Some National Student Financial Aid Scheme loans don’t even cover the full costs of tuition.
Yet student loans can form the basis of a fair payment system. They can do so if they are sufficiently large, and if one aspect of the public contribution to higher education is to eliminate the risks ordinarily bound up with taking out a loan.
This can be achieved by making no part of a student loan repayable until the graduate is earning above a certain threshold amount. The rate of repayment can be accelerated as the graduate’s salary increases. If the graduate’s earnings never rise above the threshold amount, their entire university costs will be for the public account.
This payment system has been successfully introduced in the UK and Australia, and South Africa’s National Student Financial Aid Scheme already embodies it to a limited degree. It ensures that no student pays for the competitive advantage conferred by higher education until and unless it has actually translated into higher relative prosperity for them.
Fairness is key
In South Africa, fairness in higher education funding does not require an overhaul of the funding model to eliminate student fees, as many students and their supporters insist. Instead, it requires progressive reform of the current payment system.
At the least, the National Student Financial Aid Scheme must increase the size of its loans, broaden its coverage and raise the threshold earnings level at which repayment kicks in. This is currently set at R30,000 per year. These measures would ensure that no school leaver could rationally be deterred by the payment system from pursuing higher education.
This expansion of the loan scheme would of course require an initial capital investment. There are a variety of ways in which this could be financed. For example, if earlier generations of university graduates paid proportionally less than today’s students for the benefits they received, it would make good sense to impose a special tax on them.
In the medium to long term, South African higher education needs both a fair funding model and a fair payment system. In constructing and maintaining these, we must bear in mind a key insight of modern social democratic politics: full public provision is not always the route to social justice.